]]>Austin, Texas, is home to a growing list of high-quality urban infill projects, from small ones like Saltillo Lofts to large-scale redevelopments like the Mueller Airport project. Until now, however, there were no examples of how to redevelop aging automobile-oriented commercial corridors. The Airport Boulevard project seeks to change that.

In a complex public/private partnership, the city of Austin is working with Fort Worth–based Gateway Planning Group to create a plan and implementation program for redevelopment of the corridor, including a large vacant mall and various smaller-sized sites along a three-mile (4.8 km) stretch of Airport Boulevard. The roadway was originally developed in the years following World War II in classic automobile-oriented, single-use fashion. Although the corridor does contain some longtime and beloved businesses, much of the suburban-style pad site development is dated and now the city and neighborhoods want a more walkable, urban environment. At the core of the strategy will be a form-based code acting as a physical guide for the future built form of development along the corridor to create a coordinated development context.

According to Scott Polikov, president of Gateway Planning Group, the core of the plan is to leverage city, county, community college, and private investment in a way that benefits all properties along the corridor. The Airport Boulevard strategy goes above and beyond and uses an implementation plan that ties finances together in a unique manner. “Everyone is coordinated,” he explains, “allowing large and small property owners to act as if a single entity controlled the entire corridor.”

“There was no way to do redevelopment on a corridor-wide basis [without this approach],” explains Austin city councilmember Chris Riley, the key political proponent of the Airport Boulevard effort. Effectively, the city and county will invest in infrastructure upfront in return for a higher tax base later, while a major developer, Austin-based RedLeaf Properties, will invest in additional stormwater detention benefiting the entire corridor, not just the mall site. In return, RedLeaf will receive fiscal reimbursements from a tax increment financing (TIF) district, if created by the city and county. This will result in property owners of smaller parcels along the corridor benefiting from not having to provide on-site detention, thus enabling significant development intensification on their sites, which will also be upzoned under the form-based code. In essence, the plan seeks to make all disparate ownership entities along the corridor act together, in a manner similar to that of a master-planned community.

A major catalyst project along the corridor is the vacant Highland Mall, which is proposed to be redeveloped by RedLeaf Properties in partnership with Austin Community College (ACC), which will develop its central campus there. The community college plans to utilize about half of the 80-acre (32.4 ha) site, including most of the mall buildings, for use as classrooms and administrative offices as well as a conference center, wellness center, and professional development center. Starting in 2014, ACC will open administrative offices in the former Dillard’s store, with other sections of the mall to follow. The surrounding site, consisting mostly of surface parking, will be developed by RedLeaf or sold as separate parcels to other developers. The concept is to develop 2 million square feet (186,000 sq m) of residential and commercial uses in primarily a four-story format, following the form-based code standards. A major emphasis will be on a high-quality streetscape and pedestrian connection across Airport Boulevard to the Highland Mall MetroRail station. RedLeaf Properties and ACC have agreed to allow the Gateway Planning–led rezoning to include the mall site for continuity.

Citing its importance as a tool in the redevelopment of the corridor, Polikov will use a form-based code to tie together disparate physical parts of the corridor, including private development frontages and the public realm of Airport Boulevard itself, into a pedestrian-friendly, cohesive whole that increases the value of the entire three-mile (4.8 km) corridor. The form-based code will dictate building height, density, and design as well as streetscape and pedestrian frontages, providing the developer with more certainty for the project and others along the corridor.

Noting how past corridor redevelopment efforts didn’t deal well with the actual appearance of building frontages or transitions to the existing neighborhood, councilmember Riley emphasizes the importance of using a form-based code versus use-based zoning for redevelopment. He says he believes it is a promising alternative and “a way to work with the community for a positive redevelopment vision.” Not focusing on mixed use alone, a form-based code will bring predictability that lets all parties know what is expected, making the corridor easier to develop. In fact, Riley frequently refers to the overall effort as the “form-based code plan,” not the Airport Boulevard plan. Polikov stresses that this approach creates what he calls “adjacency predictability” from property to property, the key to underwriting in a multiownership environment.

Matt Whelan, principal at RedLeaf Properties, concurs with Riley that developers want consistency and clear understanding of the rules, and elimination of confusion and risk. He says he is hopeful that the form-based code will help ensure this. “We hope so!” Whelan laughs. “It’s coming, so we hope it’s good. The devil is in the details.”

A critically important part of the redevelopment process is neighborhood support. While political leadership is crucial to moving projects like this forward, Riley notes that all of this wouldn’t be possible without citizens’ support. “It really started with the neighborhoods,” he says, indicating a clamoring for more redevelopment. He likens an early public meeting to the story in Jane Jacobs’ The Death and Life of Great American Cities, where one by one, neighbors stood up to testify—and in the case of Austin, it was for destinations that can be reached on foot or bicycle.

Capitol Metro’s new passenger rail service, which connects downtown Austin and its northern suburbs, runs largely parallel to Airport Boulevard, and includes two stations and a third proposed as a result of this redevelopment initiative, with emerging transit-oriented development opportunities at each station. Already open is Midtown Commons at Crestview Station, a mixed-use development by Trammell Crow Company’s High Street Residential subsidiary whose first phase opened in 2009 with 316 apartments and a 60,000-square-foot (5,580 sq m) commercial building.

Mark Fowler, vice president of development management in the Austin office of Trammell Crow, reports that apartment occupancy has been excellent, and Midtown Commons has been 95 to 96 percent leased since stabilized occupancy was achieved. Phase II, with 246 more apartments, breaks ground in March 2012. When a third phase is complete, there will be approximately 900 residential units plus the commercial space on their 21-acre (8.5 ha) site, which is a portion of the larger 73-acre (29.5 ha) former Huntsman research and development facility. The remaining acreage is under contract to D.R. Horton for single-family homes. Lease-up of Trammell Crow’s 60,000 square feet (5,580 sq m) of office and retail space has been a challenge, compounded by a lack of on-street parking along the busy arterial the retail space fronts. A bright spot, however, has been the Black Star Co-op Pub & Brewery, a microbrew pub in Midtown Commons with a cooperative ownership structure, making it very popular among Austin beer connoisseurs.

The success of and lessons learned from Midtown Commons provide insights into the future appearance of and development pattern along Airport Boulevard. Much of the corridor could include four-story, mixed-use infill similar to that in Midtown Commons. Smaller infill sites may have fewer stories, but all will be knit together by design standards, creating common pedestrian frontages along the corridor rather than isolated pads. The Airport Boulevard community visioning process occurred last fall, with the design and preliminary planning for the corridor wrapping up now. Summer 2012 will see the writing of the form-based code, with rezoning and financing occurring in the autumn of 2012 and beyond.

Of greatest significance, the form-based code will also define the design of the public realm of Airport Boulevard itself. The cross section of the street will include wide sidewalks (as wide as 30 feet [9.1 m]) with landscaping, benches, and room for sidewalk cafés, on-street parking when possible, continuous bike lanes, through-lanes, and a landscaped median. On-street parking is seen as important enough that while some sections will be parallel in design, the use of back-in angled parking may be utilized as well.

Exactly how the project will be financed remains to be seen. Polikov indicates that a proposal is moving forward with a strategy for (TIF) reimbursements for common infrastructure such as the detention facilities as well as potential for the reconstruction of Airport Boulevard as a future bond package item. These investments will be critical to unleashing the development potential of smaller parcels up and down the corridor, since those ownership entities would never be able to create common infrastructure themselves. “In such an important location—the demographic center of Austin—such public investment will [be paid] back easily in terms of new tax base,” says Polikov.

Although the details of financing and the form-based code are pending, the Airport Boulevard strategy is a model for corridor redevelopment worth emulating. The political, public, and private support for the strategy is critical, and the form-based code offers a good means for representing that vision for future development.

]]>“The takeaway quote of this panel is: ‘We don’t need any more office space,’ ” Those were the words of Chris Macke, principal at Chicago-based General Equity Real Estate. Macke was a presenter at the session titled “Rethinking the Office Market” at ULI’s 2011 Fall Meeting in Los Angeles. As it turned out, his quote was a summary of not just his presentation, but also the comments of the panel. While his conclusion may seem dire, it was backed up not only by him and the panel, but also by larger trends such as a changing corporate climate and a stagnant economic recovery that are having profound impacts on the office market.

While gross domestic product has recovered, the United States has regained only 14 percent of the jobs it shed during the Great Recession. This, more than any other factor, is negatively affecting office rents and vacancies across the country, as very few markets are thriving. (Though some locations, often central business districts, are improving, many markets, especially suburban ones, continue to languish.) As well, some sectors—such as technology, media, and some health care–related industries—are doing well, while others are contracting, including government offices and banking.

The panelists generally agreed that understanding not only market sector fluctuations but also changes to the workplace is important to be successful in office development, investment, and leasing going forward. Even if there isn’t demand for new net square footage, as needs for the type, layout, and location of office space change, opportunities for developers and investors are emerging.

“Understanding the client is key at this time,” explained panelist Joaquin de Monet, president and CEO of Los Angeles–based Arden Realty, Inc. “What do tenants want? We survey all our tenants, and worry about retention.” Phil Mahoney, executive vice president at Cornish & Carey Commercial Newmark Knight Frank, echoed de Monet’s sentiments, indicating cost is secondary to value right now. “It’s more about my competitors and how I can recruit and keep the best employees,” Mahoney said, describing the point of view of employers and office tenants. “Apple and Google are less concerned about the debt crisis than their next product release.” He emphasized that the right office and creative work environment is an important aspect of the competition among these firms to recruit the best and brightest.

De Monet indicated that the key now for tenants is value, loyalty, and going beyond the commodity of office space with basic services and adding something of value to tenants. He stressed differentiators, such as office design, access to other resources, and sustainability. While the panelists agreed that Leadership in Energy and Environmental Design (LEED) has become much more commonplace in the past five years and now is a requirement for a number of office users, understanding the differentiators is important. “Work used to be what you do, not where you do it,” explained Ed Cook of California-headquartered McCarthy Cook. Now, he said, the reverse is true. As a result, office environments must be exciting, collaborative, productive, and located near transit and where people want to live, according to John Kilroy, president and CEO of Kilroy Realty Corp., based in Los Angeles. “This is increasingly true among [generation Y], the fastest-growing portion of the workforce,” he noted.

De Monet noted that office space requirements have shrunk to just 105 square feet (9.8 sq m) per employee in some places (see Urban Land’s August 2011 article). Part of this increased office density is attributable to open floor plans, which feature fewer individual offices and cubicles and a more collaborative environment where employees share workspaces, sometimes even sitting on benches at large communal tables. Furthermore, this shift isn’t restricted to just the tech industry, said Phil Belling, managing principal at LBA Realty, who noted that the American Automobile Association wanted an open, collaborative floor plan in their new office space. Allocating less space per employee also has to do with economics, as companies have tried to cut expenses since the onset of the recession.

While the headline-grabbing changes to office design include young, hip Gen Y workers collaborating at tables and on beanbag chairs rather than at conventional desks, less sexy details cannot be overlooked. For instance, increased office density requires the inclusion of more elevators and restrooms for the average floor plate, changes to the fire code to allow for more people per floor and building, as well as potentially more parking spaces per 1,000 square feet (93 sq m) of space, at least in locations not served by mass transit.

So, while it may be true that no new net office space is needed at present, there will certainly be development opportunities as companies endeavor to stay competitive and a changing workforce demands different designs, locations, and amenities. Mahoney agreed, saying real estate is like politics. “It’s all local,” he opined. “Some places could accept more development; others should wait.” Thus, office development will continue to occur in key locations, while other areas will continue to languish in terms of occupancy, much less new development. With all the pressures of providing green and efficient offices with new layouts, as well as minimal net demand for new space, office developers and investors have their work cut out for them in the coming years.

]]>http://urbanland.uli.org/sustainability/rethinking-the-office-market-office-sector-realities-and-strategies/feed/0Suburban Infill – Solving Infrastructure and Financing Challengeshttp://urbanland.uli.org/capital-markets/suburban-infill-solving-infrastructure-and-financing-challenges/
http://urbanland.uli.org/capital-markets/suburban-infill-solving-infrastructure-and-financing-challenges/#commentsThu, 10 Nov 2011 00:00:00 +0000http://urbanland.uli.org/news/suburban-infill-solving-infrastructure-and-financing-challenges/Collaboration, creativity, and infrastructure were the themes of a recent ULI Minnesota event titled “Compact Development in the Suburbs: Solving Infrastructure and Financing Challenges,” which focused mostly on creating more density in the suburbs. Read more to learn about projects in suburban areas of Minneapolis, Denver, Seattle, and Houston that show compact development can work in suburbia.

]]>Collaboration, creativity, and infrastructure were the themes of the event hosted by the ULI Infrastructure Initiative and ULI Minnesota on October 10 and 11, 2011. Titled “Compact Development in the Suburbs: Solving Infrastructure and Financing Challenges,” the event featured a wide variety of speakers from around the country, who focused on how to overcome the challenges associated with creating more density in suburbs.

Many of the examples cited at the forum featured redevelopment of aging commercial properties in established suburban locations. These properties were transformed into marketable projects with increased density, a wider mix of uses, and improved options for transit, bicycles, and/or pedestrians.

West End Project, Minnesota. The recently opened West End project in suburban Minneapolis was the first case study discussed. Developed by Indianapolis, Indiana–based Duke Realty, the West End consists of a 380,000-square-foot (35,340-sq-m) lifestyle center, existing and planned Class A office, and a 120-unit apartment project set to start construction in early 2012. It is located adjacent a key freeway interchange in St. Louis Park, four miles (6.4 km) west of downtown Minneapolis.

The major takeaway from the West End project was the importance of collaboration. The Duke team met with municipal staff on a weekly basis for nearly three years. The city of St. Louis Park contributed $21 million in tax increment financing (TIF) and park dedication fees, entering into the development agreement prior to the 2008 real estate crash. Kevin Locke, community development director for the city, made it was clear that if the city was trying to put this deal together today, it would have fewer tools with which to work-—most notably, greater difficulty in utilizing TIF.

Although opening and leasing a 380,000-square-foot retail lifestyle center in a recession was challenge enough, infrastructure was another issue that the developers needed to address. The designers worked to ensure that streets for internal circulation were pedestrian-friendly, and that the redesign of the major roadway bisecting the site would be both more pedestrian-friendly and able to handle increased traffic. The city’s bicycle/pedestrian trail system was extended to reach the site. A sewer interceptor running under the site was rebuilt, and stormwater mitigation on-site seeks to reduce pollution at a nearby lake.

Finally, the 42-acre (17-ha) site spans two cities, significantly adding to complexity of the entitlements process. None of these infrastructure issues could be resolved without creativity and collaboration between the developer and one or more municipal entities. On the plus side of the ledger, there was little neighborhood opposition to the West End project, due to fact that the site was far from existing residences.

BelMar Project, Lakewood, Colorado. Another project discussed at the forum was BelMar in Lakewood, Colorado, a Denver suburb. The infrastructure component of the BelMar project was significant. For the project, developers and the city had to address how to construct and maintain a new 22-block grid of streets. These streets are designed to a higher standard than other city streets. Larry Dorr, director of finance and city treasurer for the city of Lakewood, Colorado, noted that the streets are city-owned but a cost-sharing agreement is in place for the development and ownership entity at BelMar to handle maintenance and snow removal .

CITYCENTRE, Houston. A major attractor for BelMar is its public realm—not just streets and sidewalks, but also its gathering places. This is common among recent suburban infill projects. The CITYCENTRE project in Houston, Texas, developed by Midway Companies, was also developed around a new town center, or public square, at its core, which plays host to major events throughout the year, as well as everyday gatherings. Jonathan Brinsden, CEO and executive vice president for Midway Companies, emphasizes that getting the mix of uses—hotel, apartments, offices, fitness center—right is important, but the town center is the DNA of the project and perhaps most critical for its success .

The project was able to amplify design and other elements by saving money on constructing structured parking facilities. The developers utilized the parking garages that were pre-existing on the site, saving an estimated $40 million. “We either got the land for free or the parking lot for free,” Brinsden said. “We aren’t sure which.”

Aurora Corridor, Washington. Another strategy for compact suburban development is rebuilding corridors to support multimodal transportation options. In Shoreline, Washington, an inner-ring Seattle suburb, the city is pursuing a strategy that has already created a safer, more pedestrian-friendly arterial. Along Route 99, a 40,000-vehicle-per-day arterial known as the Aurora Corridor in the area, the city is adding sidewalks, trees, and planted medians and is encouraging mixed-use infill along the corridor at densities not previously seen in the city.

Rebuilding a street to be more pedestrian- and transit-friendly alone won’t necessarily encourage the private market to increase density. Dan Eernissee, economic development manager for the city of Shoreline, used gardening as a metaphor for encouraging the type of growth and development the city wants to see. He believes the municipal government can’t really tell property owners when to sell, exactly what to develop, or what businesses should open, but it can create the right “soil.” “The key to good gardening is to create healthy soil rather than feed individual plants,” he explained.

The city must also help change the economic calculus of landowners in order to spur land use change, by upgrading the public realm and dealing with utility infrastructure as well as adding the right zoning and tax incentives. Adding in the city’s planned bus rapid transit (BRT), and landlords are able to see that the value created by redevelopment outweighs the net present value of their property as is. Just a few dollars of increased rent per unit can drive significant gains in the value of redevelopment, tipping the scales and creating a “former landlord and new investor .”

One example of a former landlord and new investor is evident in the Echo Lake project, a project developed by Spokane-based Inland Corporation that contains several components, including affordable housing for seniors, market-rate apartments, a YMCA facility, and retail space on a five-acre (2-ha) site.

State Route 7, Florida. The Route 7 Corridor in Broward County, Florida, is planning for a transformed future as well. The stretch of Route 7 targeted encompasses 32 miles (52 km) and stretches through 11 cities, complicating the process. Gary Rogers, executive director of the city of Lauderdale Lakes’ community redevelopment agency, explained that early improvements included the replacement of 12 bus shelters along the corridor. Development challenges abound along the corridor, due to narrow lots and land assembly difficulties. Despite this, a new library has opened and developers are interested in pursuing additional projects.

Funding and Financing. Financing and approvals continue to pose challenges to redevelopment. Ranadip Bose, a consultant with Chicago-based S.B. Friedman Companies, provided an overview of value capture strategies, where the cost of infrastructure is borrowed against future increases in property value. Bose pointed to Atlanta, where TIF is being used to spur redevelopment along the city’s Beltline, and Portland, where TIF and a special assessment raised 40 percent of the $100 million needed to build that city’s famed streetcar. Other strategies include a land value tax, joint development agreements, transit reinvestment zones, and transportation and/or development impact fees.

Jay Lindgren, an attorney with Dorsey & Whitney in Minneapolis, suggested that cities and other agencies offer incentives and policy assistance for site assembly, including removing barriers, strengthening eminent domain laws, and creating new funding sources. Lindgren also noted that cities need to be more proactive about development.

Prospects. Market conditions—including changing preferences—mean that continued redevelopment and intensification of suburban infill sites are likely. However, mixed-use infill projects are difficult—they can encompass the rebuilding of public streets, adding transit, replacing aging infrastructure with greener solutions, dealing with adjacent property owners, and working across jurisdictional boundaries. Understanding these issues and solving them through collaboration and new financing and regulatory tools will be key.

]]>http://urbanland.uli.org/capital-markets/suburban-infill-solving-infrastructure-and-financing-challenges/feed/0Reviving a Dying Mallhttp://urbanland.uli.org/capital-markets/reviving-a-dying-mall/
http://urbanland.uli.org/capital-markets/reviving-a-dying-mall/#commentsMon, 07 Nov 2011 12:55:00 +0000http://urbanland.uli.org/news/reviving-a-dying-mall/Much has been speculated about the death of the mall and what to do about it, and solutions vary. One innovative reuse of an aging, enclosed mall can be found in Austin, Texas, where a local community college is taking over the space, and a developer partner is proposing to develop a mix of housing, office, and retail uses on surrounding surface parking lots. Learn more to learn the specifics.

]]>Much has been speculated about the death of the mall and what to do about it, and solutions vary. One very innovative reuse of an aging, enclosed mall can be found in Austin, Texas, where a local community college is taking over the space, and a developer partner is proposing to develop a mix of housing, office, and retail uses on surrounding surface parking lots.

The project is part of a greater planning effort to redevelop a stretch of Airport Boulevard, a mid–20th century urban highway. In many ways, the former Highland Mall is the signature project for the corridor. A partnership between Austin Community College (ACC) and Red Leaf Properties will redevelop the 80-acre (32-ha) site. The footprint of the 1.2 million-square-foot (111,600-sq-m) mall will not change appreciably, but the former anchor department stores will become administrative offices and classroom space for ACC. Red Leaf Properties will develop 2 million square feet (186,000 sq m) of residential, retail, office, and hotel uses on 40 acres (16 ha) of parking lots.

Included in the plan is a strong pedestrian connection to the Highland station stop of Capitol Metro’s new passenger rail line in Austin. As well, the plan for the Highland Mall site, as for the entire Airport Boulevard, is for a form-based code to drive the approvals process and zoning. The form-based code will dictate building height, density, and design, as well as streetscape, providing the developer with more certainty for their project and others along the corridor.

Despite good public reception and the form-based code, the plan for the Highland Mall redevelopment is complex. The mall must be purchased from multiple entities, including a rare partnership between Simon Properties and General Growth that owns the buildings, and AIG, which owns the land. Cross-easements exist and utilities run below the site. Furthermore, complex financing agreements must be hammered out for development to occur.

Overall, the site offers an excellent location for the Austin Community College to establish a headquarters campus, and for a mix of uses to be added to a major and transit-served corridor in the city. The redevelopment of the Highland Mall should provide a critical anchor for the revitalization of the Airport Boulevard Corridor.

]]>http://urbanland.uli.org/capital-markets/reviving-a-dying-mall/feed/0Urban Grocershttp://urbanland.uli.org/economy-markets-trends/urban-grocers/
http://urbanland.uli.org/economy-markets-trends/urban-grocers/#commentsFri, 04 Nov 2011 10:36:00 +0000http://urbanland.uli.org/news/urban-grocers/More and more, major grocers are finding ways to open stores in urban neighborhoods, but it isn’t easy. As noted during the “Developing Walkable Urban Groceries in Mixed-Use Environments” session at ULI’s 2011 Fall Meeting in Los Angeles last month, getting the design of a grocery store right while simultaneously accommodating residential units on the site is particularly daunting.

]]>Major grocers are increasingly finding ways to open stores in urban neighborhoods (see the following article in the May 2011 issue of Urban Land: http://urbanland.uli.org/industry-sectors/grocery-wars/), but it isn’t easy. As noted during the “Developing Walkable Urban Groceries in Mixed-Use Environments” session at the Urban Land Institute’s 2011 Fall Meeting in Los Angeles last month, getting the design of a grocery store right while accommodating residential units on the site at the same time is particularly daunting.

This session was moderated by Neal Payton, principal at Torti Gallas and Partners, which has significant experience designing mixed-use urban grocery projects. It featured John Given, principal of the CIM Group, a developer of mixed-use urban grocery projects, and Donald Wright, senior vice president of real estate and engineering for Safeway. The group brought considerable development, design, and practical advice for those considering developing an urban grocery store as part of a mixed-use project.

The following is a range of the highlights and takeaway lessons from the session.

1. Mixed-use expertise. Mixed-use developers typically are either residential developers who add retail or retail developers who add residential. They specialize in one, but the secondary use often suffers. With urban grocery stores in mixed-use buildings, this imbalance will not suffice. One must have a development team who is well versed in each.
2. Design is tough to blend. It is physically hard to actually place residential units above a grocery store, as the floor space in the store cannot be interrupted by vertical impediments like elevators, residential entry lobbies, exit stairs, ventilation from garages, and plumbing stacks. In other words, the interior of an urban grocery store must be largely similar to the layout of other stores in the brand. “Grocers have honed their suburban store design,” explained Payton, “but they have to be a little flexible in urban areas.” Typically, column grids don’t match up, either. If there is room on the site to build the residential portion not directly above the store, or perhaps over linear retail instead, it is preferable, as was done at the CityVista project in Washington, D.C.
3. Parking is absolutely necessary. Nearly all urban-format grocery stores need parking, and it must be separated from residential parking. Often, grocers require five spaces per 1,000 square feet (93 sq m) of store. Even in the substantially denser urban locations where significant percentages of customers walk, sufficient parking is still required, although the allotment can be as low as two or three spaces per 1,000 square feet. Furthermore, Wright was emphatic that whether it is on the roof of the store or underneath, parking must be easy to access and well-lit, and have a higher ceiling than residential parking. Also, store signage and the entrance must be as intuitive as those used for a surface-parked traditional suburban store. “One bad or confusing experience and a customer will not return,” he said.
4. Pedestrian entrance. Equally critical is the store’s pedestrian entrance, which in an urban area requires a welcoming access point from the sidewalk. “Coming across a threshold is important,” said Wright. However, grocers don’t necessarily want too much exposure and light, as natural sunlight and windows can negatively affect HVAC systems and refrigerated goods. Plus, grocers rely on brand identity rather than window-shopping and customers’ ability to see their product. Thus, a big sign is more important than streetfront windows, and the sidewalk can be lined with complementary retail shops.
5. Delivery dock design. Grocery stores rely on high volumes of truck deliveries, often during the night. If residential is part of the mix, it is important to hide truck loading docks, if possible under cover and enclosed to reduce noise.
6. Grocery stores transform neighborhoods. John Given, who helped develop the Ralph’s grocery store in South Park in downtown Los Angeles, described urban grocery stores as providing an essential element of street life for neighborhoods. As for the Ralph’s grocery store, he said he believes it is more important to the everyday life of downtown than L.A. Live or Disney Hall.

]]>http://urbanland.uli.org/economy-markets-trends/urban-grocers/feed/0Re-Thinking the Office Market: Office Sector Realities and Strategieshttp://urbanland.uli.org/sustainability/re-thinking-the-office-market-office-sector-realities-and-strategies/
http://urbanland.uli.org/sustainability/re-thinking-the-office-market-office-sector-realities-and-strategies/#commentsMon, 31 Oct 2011 13:11:00 +0000http://urbanland.uli.org/news/re-thinking-the-office-market-office-sector-realities-and-strategies/“We don’t need any more office space.” This is the takeaway quote from a session titled “Rethinking the Office Market” at ULI’s 2011 Fall Meeting in Los Angeles. Though this pronouncement may seem extreme, the five panelists in attendance gave their insights into what has changed in the office market over the course of the Great Recession—and what can be expected in coming years.

]]>“The takeaway quote of this panel is: ‘We don’t need any more office space,’ ” Those were the words of Chris Macke, principal at Chicago-based General Equity Real Estate. Macke was a presenter at the session titled “Rethinking the Office Market” at ULI’s 2011 Fall Meeting in Los Angeles. As it turned out, his quote was a summary of not just his presentation, but also the comments of the panel. While his conclusion may seem dire, it was backed up not only by him and the panel, but also by larger trends such as a changing corporate climate and a stagnant economic recovery that are having profound impacts on the office market.

While gross domestic product has recovered, the United States has regained only 14 percent of the jobs it shed during the Great Recession. This, more than any other factor, is negatively affecting office rents and vacancies across the country, as very few markets are thriving. (Though some locations, often central business districts, are improving, many markets, especially suburban ones, continue to languish.) As well, some sectors—such as technology, media, and some health care–related industries—are doing well, while others are contracting, including government offices and banking.

The panelists generally agreed that understanding not only market sector fluctuations but also changes to the workplace is important to be successful in office development, investment, and leasing going forward. Even if there isn’t demand for new net square footage, as needs for the type, layout, and location of office space change, opportunities for developers and investors are emerging.

“Understanding the client is key at this time,” explained panelist Joaquin de Monet, president and CEO of Los Angeles–based Arden Realty, Inc. “What do tenants want? We survey all our tenants, and worry about retention.” Phil Mahoney, executive vice president at Cornish & Carey Commercial Newmark Knight Frank, echoed de Monet’s sentiments, indicating cost is secondary to value right now. “It’s more about my competitors and how I can recruit and keep the best employees,” Mahoney said, describing the point of view of employers and office tenants. “Apple and Google are less concerned about the debt crisis than their next product release.” He emphasized that the right office and creative work environment is an important aspect of the competition among these firms to recruit the best and brightest.

De Monet indicated that the key now for tenants is value, loyalty, and going beyond the commodity of office space with basic services and adding something of value to tenants. He stressed differentiators, such as office design, access to other resources, and sustainability. While the panelists agreed that Leadership in Energy and Environmental Design (LEED) has become much more commonplace in the past five years and now is a requirement for a number of office users, understanding the differentiators is important. “Work used to be what you do, not where you do it,” explained Ed Cook of California-headquartered McCarthy Cook. Now, he said, the reverse is true. As a result, office environments must be exciting, collaborative, productive, and located near transit and where people want to live, according to John Kilroy, president and CEO of Kilroy Realty Corp., based in Los Angeles. “This is increasingly true among [generation Y], the fastest-growing portion of the workforce,” he noted.

De Monet noted that office space requirements have shrunk to just 105 square feet (9.8 sq m) per employee in some places (see Urban Land’s August 2011 article:http://urbanland.uli.org/Articles/2011/August/NewbergOffice). Part of this increased office density is attributable to open floor plans, which feature fewer individual offices and cubicles and a more collaborative environment where employees share workspaces, sometimes even sitting on benches at large communal tables. Furthermore, this shift isn’t restricted to just the tech industry, said Phil Belling, managing principal at LBA Realty, who noted that the American Automobile Association wanted an open, collaborative floor plan in their new office space. Allocating less space per employee also has to do with economics, as companies have tried to cut expenses since the onset of the recession.

While the headline-grabbing changes to office design include young, hip Gen Y workers collaborating at tables and on beanbag chairs rather than at conventional desks, less sexy details cannot be overlooked. For instance, increased office density requires the inclusion of more elevators and restrooms for the average floor plate, changes to the fire code to allow for more people per floor and building, as well as potentially more parking spaces per 1,000 square feet (93 sq m) of space, at least in locations not served by mass transit.

So, while it may be true that no new net office space is needed at present, there will certainly be development opportunities as companies endeavor to stay competitive and a changing workforce demands different designs, locations, and amenities. Mahoney agreed, saying real estate is like politics. “It’s all local,” he opined. “Some places could accept more development; others should wait.” Thus, office development will continue to occur in key locations, while other areas will continue to languish in terms of occupancy, much less new development. With all the pressures of providing green and efficient offices with new layouts, as well as minimal net demand for new space, office developers and investors have their work cut out for them in the coming years.

]]>http://urbanland.uli.org/sustainability/re-thinking-the-office-market-office-sector-realities-and-strategies/feed/0You Say You Want a (Food) Revolution—Count Me Inhttp://urbanland.uli.org/industry-sectors/you-say-you-want-a-food-revolution-count-me-in/
http://urbanland.uli.org/industry-sectors/you-say-you-want-a-food-revolution-count-me-in/#commentsFri, 28 Oct 2011 11:17:00 +0000http://urbanland.uli.org/news/you-say-you-want-a-food-revolution-count-me-in/Local food is a hot topic. From community gardens that provide healthy food and a place for neighbors to meet, to resorts and tourist attractions that feature regular farmers markets and restaurants with farm-to-table dinners, the popularity of food and its source is driving real estate development in not-so-subtle ways. Read more to learn what some developers are doing to capitalize on this trend.

]]>Everywhere you look, local food is a hot topic. Community gardens provide healthy food and a place for neighbors to meet. Popular restaurants, like the Wise Acre in Minneapolis, Minnesota, feature food sourced from a farm just 50 miles (80 km) away. Farmers markets are everywhere, and food carts are a mobile option for budding restauranteurs to demonstrate their talent. The popularity of food and its source is driving real estate development in not-so-subtle ways.

Chris Meany, a partner at Wilson Meany Sullivan LLC, helped develop the Ferry Building in San Francisco. Today, the Ferry Building is one of the five most visited places in San Francisco. Retailers there boast sales of $1,250 per square foot ($13,440 per sq m). Furthermore, the days the farmers market is held are the days the indoor retailers do their best business. Meany credits this success to the uniqueness and local flair of the food vendors in the Ferry Building. They are one-of-a-kind and often with local sourcing, and thus very popular.

Wilson Meany Sullivan is also on the team to redevelop Treasure Island. As part of that plan, 20 of the 200 acres (8.1 of the 81 ha) of open space/parkland will be dedicated to agriculture, in partnership with local farmers who will help grow greens for the residents of the island.

On the Hawaiian island of Kauai, DMB Associates has developed Kukui’ula, a resort community with a twist. Although it has many of the things on the list of resort community amenities, including a golf course, spa, club, and mixed-use village, Kukui’ula offers a farm. Brent Harrington, senior vice president of DMB, explained that as a developer they realized potential buyers were interested in their health, and providing local food could accomplish this. Residents are free to gather and pick fruits, vegetables, herbs, and tropical flowers. In addition, they offer farm-to-table dinners, and a weekly culinary market and farmers market in the mixed-use village. It has been a rousing success, and, like the Ferry Building, the day of the farmers market is the highest-revenue day for retailers in the mixed-use village.

Sibella Kraus, president and director of Sustainable Agriculture Education (SAGE), discussed the many ways in which local food can be had, including food policy councils, farmers markets, community gardens, hobby farms, and food hubs. She noted that we eat every day, so it only makes sense that we care about getting food from as close as possible. She noted that communities are including food and agriculture in their comprehensive plans, as a means of sourcing local food and creating green buffers and open space. With regard to sustainable development, she pointed out that we are building net-zero-energy projects, so why not build net-zero food projects?

]]>http://urbanland.uli.org/industry-sectors/you-say-you-want-a-food-revolution-count-me-in/feed/0Practitioners Seeing Shift to Urban Living on the Ground, Confirming Forecastshttp://urbanland.uli.org/economy-markets-trends/practitioners-seeing-shift-to-urban-living-on-the-ground-confirming-forecasts/
http://urbanland.uli.org/economy-markets-trends/practitioners-seeing-shift-to-urban-living-on-the-ground-confirming-forecasts/#commentsTue, 30 Aug 2011 00:00:00 +0000http://urbanland.uli.org/news/practitioners-seeing-shift-to-urban-living-on-the-ground-confirming-forecasts/A number of long-range forecasts show that demographic changes and a shift in customer preferences will lead to increased demand for urban living. For example, Robert Charles Lesser & Co. indicates that 77 percent of generation Y plans to live in an urban core. Learn the specifics of what all this research says about the major boost for the apartment market that is expected in the coming years.

]]>Numerous long-range forecasts show that demographic changes and a shift in customer preferences will lead to increased demand for urban living. So is the market actually seeing this on the ground? The answer seems to be “yes.”

A number of prognosticators forecast substantial future demand for urban living in the coming years.

As of the middle of this past decade, A.C. Nelson—now at the University of Utah—predicted demand for nearly 20 million attached housing units in the United States by 2025.

Consumer research conducted by Bethesda, Maryland–based Robert Charles Lesser & Co. indicates that 77 percent of generation Y plans to live in an urban core. Furthermore, due to a variety of demographic factors, there exists a 12 million–unit undersupply of attached housing.

The U.S. Environmental Protection Agency indicates that an increasing percentage of housing permits in many metropolitan areas is occurring in the urban core.

Chris Leinberger believes that walkable urban areas will see the most demand in coming years.

The National Multi Housing Council says that 66 percent of new households created between 2008 and 2015 will be renters, and 86 percent of new households formed between 2000 and 2040 will not have children.

Furthermore, A.C. Nelson now estimates that the rental housing market will add 9 million to 12 million units by 2020, and that rental housing will make up 41 percent of the nation’s housing by then.

The National Association of Realtors believes there is unmet demand for urban living.

All of this research and these various prognostications point to a major boost for the apartment market in the coming years; indeed, this boost is materializing already. Developers, brokers, and investors around the country are finding that conditions on the ground in metro areas across the nation are responding to these changing demographics—an early indication of future hot market sectors.

Although the for-sale townhome and condominium market continues to lag (along with single-family houses) in most areas of the country, the apartment market is coming around. Marcus & Millichap, a national apartment research and advisory firm based in Phoenix, Arizona, sees a positive outlook in its 2011 National Apartment Report.

Hessam Nadji, senior vice president, managing director, Research and Advisory Services, Marcus & Millichap, believes the current surge in apartment demand has more to do with some temporary factors than with the usual driver, which is employment growth. “Release of pent-up demand from young adults who moved in with family and doubled up during the recession, reversal of homeownership, and lower tenant turnover at apartment complexes are the main temporary factors,” explains Nadji. “As these factors level off or fade in the next year or so, job growth should pick up, so the overall improvement in demand should remain strong.”

Marcus & Millichap indicates that nationwide vacancy is projected to fall in 2011 to 5.8 percent, a decline of 1.1 percent. A lack of new supply and the improved hiring in the economy will also lead to a 4.5 percent increase in effective rents to a projected average of $1,002 per month.

“Longer term, the sheer number of young adults will be a major driver of demand,” explains Nadji. “Between 2010 and 2020, the total number of 20- to 34-year-olds in the U.S. will increase by 5 million. This comes at a time when new supply is becoming more difficult to add. With the exception of some high-construction metros, supply is likely to fall short of demand for at least the next five years.”

Market preference is dictating the location of apartment development as well, and renters of all ages tend to want to be in walkable, connected locations. Markets such as Chicago, Seattle, San Francisco, and Minneapolis are experiencing most demand for apartments in core city locations. Denver has seen demand near light-rail stations. In Minneapolis, the Cassidy Turley 2011 Annual Market Report indicates that most demand for new housing is in the two core areas of Minneapolis and St. Paul, with fully 73 percent of all proposed apartment units to be located there.

Says William MacDonald, executive managing director, East Region, Mill Creek Residential Trust, and assistant chair of ULI’s Multifamily Council (Gold Flight), “I think that demand for urban living and transit-oriented locations is strong.” He notes that New York City, Boston, and Washington, D.C., all have recent examples of this. “Renters with no children at home tend to want to be close to their place of employment and retail, restaurants, and bars.”

Mary Ann King, president of Moran and Company, based in the firm’s Irvine, California, office and chair of the Institute’s Multifamily Council (Blue Flight), cites that companies that conduct employee preference surveys are increasingly finding a desire for urban living, to the point that companies are choosing urban locations for their offices. Students also favor city life, and are choosing colleges and universities in urban locations “where the action is.” She notes that there is less need for internal amenities like a pool, because the amenities that people increasingly want are found in the city. Whether urban or suburban, apartments near a walkable urban environment perform better. “The perfect location [lies within] walking distance [of] Starbucks, Whole Foods, and Barnes & Noble,” she says. Choosing urban living is about more than just the cost to commute, it is the environment. King notes that it isn’t just renters choosing urban and walkable locations—investors are doing so as well.

So it seems that those with an ear to the ground are confirming that the market is increasingly expressing a preference for urban, walkable locations. The fact that investors are picking up on this is evidence of a long-term trend. What remains to be seen, however, is whether supply can keep up.

]]>http://urbanland.uli.org/economy-markets-trends/practitioners-seeing-shift-to-urban-living-on-the-ground-confirming-forecasts/feed/0The Incredible Shrinking Office Space – Fact or Fantasy?http://urbanland.uli.org/economy-markets-trends/the-incredible-shrinking-office-space-fact-or-fantasy/
http://urbanland.uli.org/economy-markets-trends/the-incredible-shrinking-office-space-fact-or-fantasy/#commentsWed, 24 Aug 2011 00:00:00 +0000http://urbanland.uli.org/news/the-incredible-shrinking-office-space-fact-or-fantasy/With streamlining, downsizing, outsourcing, improved technology, cloud computing, and more working from home, future demand for office space is a question on the minds of many people in the commercial real estate sector. In light of these trends, an improved economy will not necessarily result in more demand for office space. Read what challenges experts say lie ahead for office landlords.

]]>A significant unanswered question in commercial real estate is future demand for office space. With streamlining, downsizing, outsourcing, improved technology, cloud computing, and more employees working from home, will an improved economy necessarily result in more demand for office space? What will companies’ long-term space needs be? Will some have reduced office space needs even as they expand? The jury is still out.

Perhaps no industry sector has suffered more in recent years than the office market. According to the Colliers International 4th Quarter 2010 U.S. Office Market Report, the overall office vacancy rate was 16.1 percent. The recovery has begun, but there is a long way to go before office vacancy is back down below 10 percent. However, shifts in the workplace are indicating a “new normal,” which could mean some sectors of the office market will never recover. Could this be true?

A recent study conducted by Jones Lang LaSalle indicates that the current rule of thumb of 200 square feet (18.6 sq m) per employee may shrink to as little as 50 square feet (4.6 sq m) for some tenants by 2015. Peter Miscovich, managing director of corporate solutions for Jones Lang LaSalle in New York, says he believes this will indeed be the case—if not sooner, then later. “Some of my tech clients are already there,” he says.

“We are at an inflection point,” says ULI member Miscovich. “Economic, demographic, and technological factors will all influence the future of office space.” He speaks worldwide on the future of the workplace, and cites an array of indicators:

• Half of the American workforce will be millennials in 2014; • Baby boomers will retire and paperless millennials will replace them; • 40 percent of IBM employees work from a location other than an office at IBM; and • Even something as seemingly insignificant as office space dedicated to filing has shrunk from 15 to 20 percent of office space to around 2 to 3 percent in many cases today.

Not everyone entirely agrees with this prediction. Ross Moore, chief economist for the U.S.A. at Colliers International, agrees that the workplace is changing. “Technology is finally getting in and shaking things up.” But he remains unconvinced we’ll see a wholesale shift in the office market, at least not as quickly as some like Miscovich predict. “It’s one thing for IBM to have a lot of people working remotely. Now if Procter & Gamble does it, then you’ll have my attention,” adds ULI member Moore.

Miscovich is quick to explain that offices and cubicles aren’t necessarily shrinking, but rather the need for each employee to be at the office is reduced. Thus, workers visit the hub office only a couple times per week, and therefore two or more employees can share office space, thus reducing demand for overall square footage. “You share the office space with coworkers who use it the other days,” he explains.

The basic premise for Miscovich’s argument is “how work will be done.” He believes demographic shifts in the workforce will be rooted in technology, the ability for work to be done from anywhere, and young workers’ willingness to work that way. He cites a client in New York, an advertising agency, which signed a new lease and went from 26 floors to a new lease on only six, while simultaneously adding employees. This is not an isolated trend. Across the country, brokers are seeing far more clients signing leases and needing less space rather than more.

“There will be big winners and many losers,” says Miscovich. He believes buildings that are tech-enabled, transit-oriented, green, efficient, and with amenities will attract tenants. Meanwhile, “Class B and C in the middle of nowhere in the suburbs will languish.”

Russell Ingrum, executive vice president and managing director of the investment properties/institutional group at CB Richard Ellis Capital Markets in Houston, and chair of ULI’s office development council, says the current office market recovery is led by energy, technology, and financial services. “Seattle, Austin, and the Silicon Valley are recovering well because of technology,” he explains, “and Tulsa, Denver, Dallas, and Houston are because of energy.”

As to the dire predictions of office space, “I do not put much stock in them,” explains Ingrum. “What most firms desire more than anything is to have office space that helps them recruit and retain the best employees. Who wants to work for a company that puts you in 50 square feet? It works well for some companies, but is not an option for most.”

Ingrum notes that there is definitely a flight to quality in the current recovery. In every market, the best assets are recovering first. Central business districts are most often the beneficiary, but it depends on the metropolitan area, as there are certainly suburban markets that are recovering well, too. Moore agrees with that nuanced assessment. “I don’t buy into the ‘urban great, suburban not so great’ mentality.”

Moore says there are certainly challenges ahead for office landlords. “It is a headwind, absolutely. Profits are on the line.” Moore says he believes if gross domestic product continues to grow at 3 percent and the United States adds 2.5 million jobs, there ought to be office absorption of 20 million square feet (1.86 million sq m) per quarter. If it is less, perhaps that will be an insight into future trends.

“2011 will be a crucial year,” he says.

Nonetheless, if Miscovich’s forecast is anywhere near accurate, today’s 16 percent vacancy rate will be largely immaterial as the best locations thrive and vast swaths of office buildings in subpar locations languish, never to recover. “The next 30 years will look nothing like the last,” says Miscovich.

Clearly there is no consensus on how future trends in the way people work will affect the office market broadly. The recovery may be masking some of these trends at present, but one thing is certain: a lot of people in the industry will be paying close attention.

]]>http://urbanland.uli.org/economy-markets-trends/the-incredible-shrinking-office-space-fact-or-fantasy/feed/0Grocery Warshttp://urbanland.uli.org/industry-sectors/grocery-wars/
http://urbanland.uli.org/industry-sectors/grocery-wars/#commentsTue, 10 May 2011 00:00:00 +0000http://urbanland.uli.org/news/grocery-wars/A change is in the wind for food retailing in the United States, much of it focused on cities. Grocery stores are following the housing units developed in recent years in downtowns and close-in neighborhoods. As a result, independent grocers and national chains alike are licking their chops, seeking a place in the multiple-niche urban environment. Read about the challenges these infill locations present.

]]>Urban infill sites present opportunities for mixed-projects and a greater role in neighborhoods, as well as challenges for store design and parking.

A change is in the wind for food retailing in the United States. The traditional 40,000- to 60,000-square-foot (3,700- to 5,600-sq-m) suburban grocery store is facing pressure from all sides. Larger-format retailers like Walmart and Target increasingly are offering groceries as part of their mix, and specialty and niche grocers from Aldi to Whole Foods are eating away at traditional grocers’ market share. As well, with traditional grocers like A&P filing for bankruptcy in 2010, this year promises significant churn in the grocery market.

Much of the change will be focused on cities. Grocery stores are following the urban housing units developed in recent years in downtowns and close-in neighborhoods. As a result, independent grocers and national chains alike are licking their chops, seeking a place in the multiple-niche urban environment. However, urban infill sites present their own set of challenges, particularly when pedestrian, automobile, and truck access are considered and residential units are designed above the store. Furthermore, neighbors and city officials want parking minimized and hidden when possible to enhance the pedestrian realm, whereas grocers still rely on some degree of parking to attract customers. Successful grocery stores in well-designed projects can be popular and valuable additions to neighborhoods, but they must be designed properly.

Washington, D.C., has several recent examples of large-scale mixed-use projects with grocery store anchors located in a dense, walkable urban environment. Perhaps the most prominent is City Vista, developed by Lowe Enterprises Real Estate Group and designed by Torti Gallas. It opened in 2008 and includes a 55,000-square-foot (5,100-sq-m) “urban lifestyle” Safeway grocery store as part of a large mixed-use development with 441 condominiums, 244 apartments, and 75,000 square feet (7,000 sq m) of additional retail space, including a hardware store, a dry cleaner, a gym, and restaurants, all on a 3.2-acre (12.5-ha) site.

With a split between customers arriving on foot and by car, a key for the grocery store design was to get one entrance to face the parking structure and the other to be an attractive pedestrian entrance off the street. Parking was reduced by 40 percent compared with a conventional suburban store, and the parking ratio is just 2.9 spaces per 1,000 square feet (3.1 per 100 sq m) of store space. This approach works in a dense urban environment, not only because of the 685 residential units in City Vista itself, but also because of the thousands of additional housing units within walking distance providing potential customers. In addition, the Safeway management understands that the urban shopper is more likely to shop once a day rather than once a week and thus places more emphasis on prepared foods and produce.

“When working on larger vertical, mixed-use projects with grocery anchors and residential above, one of the biggest challenges is to minimize compromises,” says Brian O’Looney, design architect with Torti Gallas and Partners, based in Silver Spring, Maryland, who was the architect for City Vista and other mixed-use projects with urban format grocery stores. “One must ensure that the residential above is efficient while maximizing unit quality and [that] the ground floor is flexible to accommodate changing retailing and commercial needs over time.”

In Portland, Oregon, where Safeway has a store as part of a mixed-use development in the Pearl District, perhaps more noteworthy is the New Seasons Market on Hawthorne Boulevard in the southeast portion of the city. Opened in August 2010, the New Seasons on Hawthorne is the locally based company’s tenth store and exemplifies a full-service store in a small format with strong ties to the neighborhood.

Knowing they could not just stamp out a boilerplate design, Herrenbruck and his team held several meetings with neighborhood groups to focus on the project. Out of those came not only a number of green features such as recycled construction materials and a bioswale to catch rainwater, but also a walk-up coffee window located next to an outdoor seating area that opens an hour before the store itself—yet another aspect of good pedestrian-friendly design. Herrenbruck notes that the store has become a gathering place for the neighborhood.

Walmart is also looking to build stores in more urban settings. Last year, it announced that 51 percent of its sales are from grocery-related products. The firm also announced plans to build four stores in Washington, D.C., as part of its move into several new urban markets. In a notable break from tradition, one of the D.C. stores will occupy 75,000 square feet (7,000 sq m) on the ground floor of a mixed-use building with 315 apartment units above. The development is a joint venture between JBG Rosenfeld Retail and the Bennett Group, both based in the Washington area.

Walmart is also proposing smaller-format stores with as little as 20,000 square feet (1,900 sq m) of space, called Walmart Express, with a heavy emphasis on groceries. One of the first stores announced in that format is a 26,491-square-foot (2,461-sq-m) site in the Presidential Towers in Chicago’s West Loop neighborhood.

Although facing pressure, the traditional suburban grocery store is far from extinct; some are adapting to more urban-style designs. A 50,000-square-foot (4,600-sq-m) Albertson’s grocery store in the town center at San Elijo Hills, California, a master-planned community north of San Diego, is one example. The town center, a Calthorpe Associates design, uses the firm’s “urban network” framework, separating large suburban-style arterial roads into narrower one-way streets. The result is better pedestrian connectivity and a more cohesive town center.

Located on the best side of the road to accommodate traffic heading home from work, the Albertson’s store is also accessible on foot or bicycle for residents who live nearby or in the town center. The store is flanked by a row of “liner lofts” and Main Street–style shops for a decidedly more urban feel, but still provides road access and sufficient parking to be viable in a suburban setting. “Setting the grocery anchor on the side of one leg of the couplet allows their parking to coexist with shop-lined streets and close-by residential,” explains ­Calthorpe. “It is a big retail engine hidden quietly behind walkable streets.”

Another good example of a suburban grocery is located outside Madison, Wisconsin. Middleton Hills, a new urbanist community designed by Andrés Duany, consists of 428 homes in the prairie, craftsman, and bungalow styles, plus a walkable town center, all on 150 acres (60 ha). The town center includes a 44,000-square-foot (4,100-sq-m) Copps Food Center grocery store that is typical in size and in having a parking lot fronting a major roadway, but which also has a pedestrian-friendly entrance off Frank Lloyd Wright Avenue, the main street of Middleton Hills. Like the Albertson’s at San Elijo Hills, the Copps at Middleton Hills is lined on two sides by a row of commercial and residential buildings that face the pedestrian-friendly street.

Fresh & Easy Market, a division of British-owned Tesco, is expanding in northern Cali­for­­nia with 10,000- to 12,000-square-foot (930- to 1,100-sq-m) urban and suburban stores. Among the stores slated to open this year is one in the Hunter’s Point/Bayview neighborhood of San Francisco. It will be on the ground floor of a mixed-use development that includes 239 residential units developed by the Holliday Group and will be located at a station along the Third Street Muni streetcar line.

On the ultrasmall and uber-local scale, the Local D’Lish grocery in Minneapolis provides a walkable alternative for residents of the North Loop, a growing residential neighborhood near downtown. With an austere 2,000-square-foot (185-sq-m) store, owners Ann and Yulin Yin focus on locally grown groceries and great customer service. Like Mayberry Foodstuffs in downtown Cincinnati, which is even smaller at 550 square feet (51 sq m), it seeks to fill a need among area residents for a convenient, walkable grocery store.

Large and small retailers, from Walmart and Safeway down to Local D’Lish and Mayberry Foodstuffs, are reshaping the urban grocery experience. Though how it plays out in the next year and beyond will be interesting, these stores show that development opportunities abound for those who can get the design, mix of uses, and business model right.